How a post-earnings price move is played by Call Option holders

This is one perspective on how to play an Earnings trade if you own Calls:

1) you own the December 13 Weekly $34 Calls into Earnings for $TOL
2) the initial reaction is up to $35 but it stalls quickly. But, it is still pre-market trading & you can’t exit your Calls yet
3) you short stock to lock in the gains on the long Calls < this is the key step
4) if a big % of Call owners do this step, then the stock fades back to $34
5) if you review the Option Chain, you will notice that the $34 Calls still have good value at the open
6) you win, & win again


My current trade in $BTCUSD:


I get asked frequently about where I trade $BTCUSD. I use multiple exchanges for several reasons (no way I want all my BTC in one place is one reason). If just starting out, I suggest Coinbase.

As for my Futures trading, I don’t recommend this at all except for traders with knowledge in this area (or hedgers, arbs). This is a very immature market – and is rife with fraud.

Earnings trade in JC Penneys

I have a new trade on today for $JCP Earnings:


Here is the breakdown:

I am long stock at $8.75
I am long the November 22 weekly $8.50 Puts
I am short the November 29 weekly $8.50 Straddle
This was done for a $.87 credit

On any weakness, I would expect it to be short-term and thus I would sell the long Puts on Friday for whatever value (so much is priced in now). Any bounce, well, I am capped at $9.37 until next Friday.

A look at Exone as it heads into Earnings

I have an existing Long stock position in $XONE with Earnings tomorrow. The other elements to the trade are what I will briefly detail here:

I am short the December 60/55 Strangle (so Calls are covered)
I am Long the November 55 Puts

Let me explain the scenario here:

I want to protect my long stock in the near term (for Earnings) so I added the November Puts just for this purpose. The short December Strangle is not viewed in the context of Earnings as I would expect Dips to be bought.

The Submarine Basket – a look at a new position in Citrix

The Submarine Basket contains stocks that are in a pullback and I determine there is a good floor for price to enter. Because traders are often wrong – and that includes me – I utilize Options to help provide a cushion to work with.

A recent add to the basket is a long entry in $CTXS. Here is my current journal entry:


Here is a breakdown:

  • I am long stock at $59.80 (1/3 position size)
  • I am short the November 60 Straddle (1/3 position size each)
  • I have a $2 Options Net (the cushion)

Here are a few scenarios that outline what the next step is based on what price does:

1) The stock goes nowhere until Friday expiration. The Straddle will be very cheap to buy back. I will then resell the same (or a Strangle) for the next expiration – to increase the cushion (would more than double)

2) The stock is $61 near the close on Friday. I would sell Calls for the next expiration to buy back the short November 60 Calls. This will be done for a credit (unless I move up a strike)

3) The stock is $58 near the close on Friday. I would sell the same strike Straddle for the next expiration & use the proceeds to buy back the short November 60 Puts. This Options Net would still increase some but the stock piece is now at a loss

4) The stock is $58 near the close on Friday. I would sell the same strike Straddle (or more likely a Strangle) for the next expiration. I would let the stock get Put to me at $60 (1/3 size) bringing my long stock position size to 2/3. This Options Net would increase some but the stock piece is now at a loss


A post-earnings trade in Facebook

I am usually interested in Dip Buying stocks after an Earnings report if the stock meets my criteria. One such stock today is $FB and this is how I elected to trade it:


Here is a breakdown:

I am long the November 49 Calls
I am short the November 1 weekly 50 Calls
I am short the November 1 weekly 49 Puts
This trade cost $.16 per contract
This trade takes some margin due to short Puts (but just through tomorrow)

Price is currently arm wrestling the $50 level so here are some choices for a next step:

1) Do nothing until tomorrow
2) Adjust the short weekly Calls to next week expiration
3) Certainly let the short Puts expire tomorrow if price holds

Wrong on the Wild Wings

I have an Earnings trade on in $BWLD that is as follows:

I went short the stock at $129.5
I bought the November 130/140 Call Spread for 3.40 debit

The after hours move in the stock has seen it rise to the $143 level (up 10%). This is what I have done so far:

Covered the short stock at 138 for -$8.50
New long stock entry at 138.45 (and this long still remains)
The long Call Spread is currently capped, but has offset a lot of the loss so far

It’s ok to be Wrong, just don’t stay wrong.

A post-earnings review on United Rentals

I put on a pre-earnings trade for $URI that involved being short stock & long the Oct 57.5 Calls. They announced early on 10/16 and the reaction was positive however. So what is the next step for this trade?


The current price of the the stock is above $60 so this is where the trade stands:

The short stock position hit a Trail Stop today at $59 for a $2 loss
This leaves me with the Long October 57.5 Calls (which expire tomorrow)

Here are a few different paths to take:

1) exercise Calls and sell November 62.5 Calls to collect $1.55 in premium
2) Sell the Calls to book the $3
3) Sell the Calls and Buy a November 60/62.5 Call Spread (this would book some gains)

Seeds planted, watching the profit grow in Monsanto

I did an earnings trade in $MON and here are the details:

I shorted the stock at 105
I went long the October 4 weekly 105 Calls

Now for a look at the exit steps:


This final step involved a review of the choices. I could have sold the remaining Calls for .27 but elected to create the Call Spread and lower the initial outlay.

The current net on the trade is:
+2.70 on the short stock piece ($3 on 1/2, 2.40 on bal)
-1.27 on the Option pieces

Price continues to hop around post-earnings but as of this post the 104 Calls are trading at $.50